Do your Homework: Most dealerships will prey on the unprepared. Going into the showroom “green” – without the requisite facts and pricing data – will give the salesperson much more control over the purchasing process. You need to thoroughly research your choices. Gather a wide variety of reviews from web sites such as Yahoo Autos!, www.edmonds.com or MSN Auto are great places to start. You want to check the reliability, safety, fuel economy and pricing of any models you are thinking about. Do not put this off until the day you plan to go to the dealer for a test drive. Research and determine what the trade-in value of your current vehicle is to determine its approximate worth. This will depend on the vehicle’s age, condition, mileage, options and other equipment along with where you trade it in.
Do not assume that the sticker price is the asking or purchase price. To get the lowest price, start with the cost of the car for the dealer, which can be found on the internet. What you are looking for is referred to as the dealer invoice price. However, this is not necessarily the price that the dealer paid for the vehicle. In most cases there are often behind-the-scenes bonuses, such as dealer incentives and kickbacks, which give dealers a higher profit margin. You can check the price-quotes on the websites listed below in the resources section for web links. A reasonable price to start negotiations is between 3 to 6 percent over the dealer invoice price or Wholesale Price. If the model is in high demand you may have to start with 8 percent and go from there. Keep in mind you can get a lower price through effective negotiation at the dealership.
Negotiate one item at one time. Salespeople often will mix in financing, leasing, and trade-in negotiations together, often asking you to negotiate around a monthly payment figure. This approach will put the power of negotiation into the hands of the dealer. This type of approach will give the dealer more latitude to offer you a favorable number in one area while inflating terms in another. Make it clear from the get go: You want the best possible markup over your starting price. Mention that you intend to visit other dealerships selling the same vehicle and you intend to buy from the dealer that gives you the best price. After you have determined and agreed to a price, now is the time to talk about financing, trade-ins or leasing. If you are met with interference you can leave at any time. Sometimes heading for the door is a sure way to jump-start a slow-moving negotiation or bring a lower offer.
Have your financing pre-approved in advance. This can be done through banks, credit unions and loan organizations – then compare what the dealer has to offer. We are starting to see more Zero Percent financing on vehicles from the different manufactures. If you do not qualify for the high terms the salesperson may not try to sign you up for a higher interest rate loan. More than likely, even with not-so good credit, you may get better deals elsewhere.
Do not pay for extra accoutrements that you may not need. Dealers will often try to lure you into to extra services such as rust-proofing, fabric-protection and paint protection. They may also try to push VIN etching on your windows to deter thieves, it doesn’t work. Most of these things to not work anyway – do not get them. These services and fees are unnecessary. If the items are listed on the bill of sale, cross them off. Most new, modern cars do not have rust problems. You can treat upholstery yourself or get your own paint protection for much less than what the dealer charges. You can also get your own VIN etching kit for anywhere from $25 to $100 and do it yourself.